The U.S. House this week will vote on legislation aimed at avoiding fiscal chaos by extending tax cuts on individuals who earn below $1 million annually, but Speaker John Boehner says it would leave in place deep defense cuts. (Army Times)
The U.S. House this week will vote on legislation aimed at avoiding fiscal chaos by extending tax cuts on individuals who earn below $1 million annually, but Speaker John Boehner says it would leave in place deep defense cuts.
The “Plan B” bill would extend those tax cuts for most Americans, giving Republicans a chance to avoid some blame if a broader fiscal deal is not struck by Dec. 31. It is also aimed at giving Boehner more leverage in ongoing talks as that deadline nears.
Unless President Barack Obama and congressional leaders can agree to a package that reduces the federal deficit by at least $1.2 trillion — and can pass both chambers — economic calamity would ensue, economists say.
That’s because a slew of tax cuts would expire, raising rates for U.S. taxpayers, and $1 trillion in cuts to non-exempt federal programs would kick in Jan. 2. The latter includes twin $500 cuts to planned national defense and domestic programs.
Asked if the bill the House will vote on later this week — likely Dec. 20 — would address those pending deep defense and domestic cuts, Boehner replied: “We would not touch the sequester.”
Boehner’s announcement came hours after details of Obama’s latest fiscal deal emerged.
Obama backed off his demand that tax cuts for families earning more than $250,000 annually be allowed to expire, raising his offer to those making more than $400,000 annually. But reports surfaced that the cuts called for in the president’s latest offer would include about $100 billion in new national security cuts over 10 years.
Both the Obama administration’s 2013 budget plan and the 2011 Budget Control Act grouped the budgets of the State Department, Pentagon and other related agencies into one massive pot of money. It is unclear whether the latest Obama offer does the same; if it does, that could spread out the cuts and lessen the pain for the Defense Department.
While the White House says its offer contains equal amounts — $1.2 trillion — in new revenues and spending cuts, Boehner told reporters Dec. 18: “We do not have a balanced plan.”
House Republican leaders’ calculations show Obama’s new offer “proposes 1.3 trillion” in revenues “but only $850 billion in cuts over 10 years.”
Boehner said he has told the president he would put forth $1 trillion in revenues if Obama offers and equal amount of spending cuts over 10 years.
Several congressional sources hinted the president’s new plan would indeed feature $100 billion in cuts to planned national security spending over 10 years.
The debate about avoiding the so-called fiscal cliff and the deep federal cuts has slowly shifted toward spending cuts in recent weeks. That could bode ill for the massive Pentagon budget, which could approach $650 billion in fiscal 2013 (including war spending).
House Majority Whip Kevin McCarthy, R-Calif., told reporters about federal spending: “That’s where the problem lies.”
Several lawmakers last week told Defense News they had no knowledge of more defense cuts being discussed between the GOP speaker and the president.
“I don’t see a scenario where more defense cuts would be brought up,” said House Armed Services Committee member Rick Larsen, D-Wash. “What I think is most likely is the extension of spending caps that have been on discretionary domestic and defense spending for a couple years. ... Those caps have had an effect on the deficit by driving down total projected federal spending.”
If the security cuts in Obama’s offer are included in a final fiscal deal, Boehner would need some Republicans in his own caucus to vote yes. Some GOP members would need to join with Democrats to pass the bill.
House Armed Services Committee Chairman Howard “Buck” McKeon, R-Calif., has led the charge against any further Pentagon cuts, arguing that move would hinder national security and degrade the U.S. defense industrial base.
“At a minimum he’d want to see particulars of where the cuts would fall,” a senior House aide said Dec. 18. McKeon remains “highly skeptical that there are any easy cuts left at [the Defense Department],” the aide said.
Senior House Democrats, during a separate meeting with reporters, questioned whether the speaker has enough Republican votes to pass his bill.
To that end, Boehner said he hopes “we can meet broader agreement with the White House.”
Later that day, White House Press Secretary Jay Carney told reporters Obama opposes the speaker’s “Plan B” bill.